A year from now, the presidential election campaign will be in full swing. Obama and the Republican nominee will be touring the country at a feverish pace, trying hard to convince swing voters to go their way. Obviously, we’re still too far out from November 2012 to know what will happen, but we’re close enough to get a sense of the shape of the race.
President Obama’s chances next year don’t look good. As of this writing, the InTrade prediction market gives the president about a 50-50 chance, and even Democratic insiders are starting to doubt the top of their ticket. According to National Journal, they’re privately giving the president just a 63 percent chance of victory, which is not a great score considering the partisan source. These relatively gloomy odds are not surprising, as the president faces some historic challenges in his reelection quest.
Obama’s biggest problem is the economy, particularly as the typical voter experiences it. Though the recession technically ended in June 2009, according to the National Bureau of Economic Research, the average American has not felt the slightest hint of a two-year “recovery.”
To start with, the unemployment rate stood at 9.1 percent in August. And that figure actually understates how bad the job market is. The Bureau of Labor Statistics (BLS) counts a person as unemployed only if he is actively looking for work but cannot find any. Given the duration of this slump, there are plenty of able-bodied people who would like to work but have become so discouraged they have given up the job hunt. When we include these people in our estimates, the picture turns much darker. For instance, the “population-employment ratio,” calculated monthly by the BLS, measures the percentage of adults who are employed: In August that number stood at 58.2 percent, compared with 63.4 percent at the peak of the previous growth cycle. In fact, we have not seen so low a number persist for an extended period since the early 1980s, and that was before the gender revolution in the workplace was complete.
One consequence of high unemployment is that people who do have jobs are in no position to negotiate for higher wages. Unsurprisingly, then, real income has been stagnant under the Obama administration. Worse, people are depending more and more on government subsidies to maintain their standard of living. Government benefits accounted for a whopping 18 percent of all income in July, up from 13.5 percent during the Clinton and Bush years. Meanwhile, some 46 million Americans now depend on government assistance to put food on the table, up from just 23 million during the previous two administrations.
For the White House, the likelihood that these terrible trends will continue into next year is a serious concern. The kind of V-shaped recovery Ronald Reagan enjoyed just before the 1984 election is probably not going to happen; in fact, the economy still might dip back into recession. The Wall Street Journal conducts a monthly survey of top economists to gauge where the economy is headed; in the most recent survey they predicted unemployment basically unchanged a year from now and a tepid 2.5 percent GDP growth rate through 2012. Even Obama’s own Office of Management and Budget is forecasting unemployment next year above 8 percent, higher than it has been in any election season since World War II. These estimates, if borne out, will mean that most Americans still are not feeling the positive effects of a recovery by Election Day.
The economy puts a real strain on Obama’s reelection effort. Since the Great Depression, eight incumbent presidents have won a second term. Six of them—FDR, Eisenhower, LBJ, Nixon, Reagan, and Clinton—won because national conditions had noticeably improved during their tenures. Just two—Harry Truman and George W. Bush—won despite the continuation of hard times. Both Truman and Bush won by convincing America that, for all the trouble the country faced, electing the opposition would make things worse.
This is Obama’s only real hope of victory next year, and it’s been clear for a while that his campaign team plans to rerun a version of the Truman campaign in 1948. In fact, at his Labor Day address to union workers in Detroit last week, the president quoted Truman’s Labor Day speech from 1948, given at the start of that year’s election campaign.